Meta Stock Surges 10.4% on Strong Q4 Earnings, AI Investment Plans
With shares rising more than 10.4% to year-to-date highs Thursday, Meta Platforms was the most impressive performer among Big Tech stocks.
Quick overview
- Meta Platforms' shares rose over 10.4% after reporting fourth-quarter earnings that exceeded Wall Street expectations.
- The company posted earnings per share of $8.88 and a revenue increase of 24% year-over-year to $59.9 billion.
- Meta plans to significantly increase capital expenditures to between $115 billion and $135 billion in 2026 to support AI development and infrastructure growth.
- Analysts remain optimistic, raising price targets and maintaining a 'buy' rating, despite concerns over losses from the Reality Labs segment.
With shares rising more than 10.4% to year-to-date highs Thursday, Meta Platforms was the most impressive performer among Big Tech stocks. The company’s fourth-quarter earnings surpassed Wall Street’s expectations and indicated strong growth going forward.
The social media company, led by CEO Mark Zuckerberg, posted fourth-quarter earnings per share of $8.88, much above analyst projections of $8.24. Revenue increased by 24% year over year to $59.9 billion, exceeding forecasts of $58.4 billion. Perhaps more impressively, Meta’s revenue projection for the first quarter of 2026, between $53.5 billion and $56.5 billion, significantly surpassed Street expectations of roughly $51.4 billion.
The robust performance made Meta the only member of the so-called Magnificent Seven tech firms trading higher Thursday, as peers including Nvidia, Alphabet, Microsoft, Amazon, and Tesla dropped.
Meta’s AI Investments Paying Off
The outcomes show that Meta is starting to see a return on its significant investments in AI. The company’s Family of Apps, which includes Facebook, Instagram, and WhatsApp, produced $58.9 billion in revenue, up 25% year-over-year. CFO Susan Li said that more over 3.5 billion people utilized at least one of Meta’s apps everyday in December.
Ad impressions surged 18% year-over-year, driven by engagement and user growth, while the average price per ad jumped 6% due to increasing advertiser demand. Meta credited most of this success to AI-powered improvements in ad effectiveness and content recommendations.
Instagram Reels view time in the U.S. surged more than 30% year-over-year, while Facebook video consumption grew at double-digit rates. Meta AI, the company’s multilingual virtual assistant integrated across its platforms and Ray-Ban smart eyewear, surpassed one billion monthly active users.
Massive Spending Plans Ahead
Despite, or possibly because of, these outstanding outcomes, Meta announced intentions to drastically boost investment in 2026. The company predicted capital expenditures between $115 billion and $135 billion, about double last year’s $72 billion investment and roughly 20% higher than Wall Street expected.
The money will finance continuing AI development, data center growth, and infrastructure to power Meta’s ambitious product plan. Unlike prior spending increases that scared investors, the market appeared to accept these intentions, with the stock soaring strongly.
Zuckerberg underlined the company’s emphasis on leveraging AI to enhance current offerings and create new capabilities. “We have a balance of new things that we’re trying to do, while also investing very heavily in making sure that all of the work that we’re doing in AI improves both the quality and business performance of the core apps,” he stated.
Meta (META) Stock Outlook: Analyst Enthusiasm
Wall Street analysts raised their price targets in response to the findings. The company is still rated as a buy by all 24 of the analysts that Visible Alpha tracks, with a mean price objective of $868, or almost 20% higher than current levels. Wedbush boosted its target to $900, Morgan Stanley to $825, and Jefferies to $1,000.
Concerns regarding Meta’s $6 billion loss in the quarter from its Reality Labs segment were also addressed. According to Zuckerberg, the unit’s losses would peak in 2026 and then gradually improve after that.
With advertising momentum strong and AI capabilities growing, Meta appears positioned to maintain its growth trajectory—provided its enormous infrastructure expenditures produce the promised returns.
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